Greater Claims Data Scrutiny Could Save Hospitals $800M

On a per-episode basis the labor costs associated with a claim returned for additional information is $30; for a technical denial (eligibility issues, for example) it's $75; and for a clinical denial, including authorization disputes, it's $175.

Deng estimates that if more payers and providers addressed their inefficient claims process that saving could top $80 million in the California market alone and $800 million nationally. On a national level a PricewaterhouseCoopers study notes that $1.2 trillion is wasted in the U.S. health system each year with inefficient claims processing accounting for $210 billion of that waste.

Savings aside, the best part of the process says Deng is the relationship that is developing between Blue Shield and the hospitals. The two meet quarterly to review the claims data stream, identify the root cause of any lingering claims issues, and to work through solutions without finger pointing. "There's trust there," Deng explains.

George Mack, vice president of payer/provider and member relations for the Hospital Association of Southern California, calls the POET program a "major step forward" in driving out waste in the claims process. He is speaking with other payers about adopting a POET-like system and expects to have another payer adopt the effort sometime this year.

Participating in POET requires the infrastructure to handle electronic data streams. But sometimes the real challenge is getting a hospital to understand the value of the data and properly use the reports. Mack says that's where the HASC collaboration helps.

Andrew Fitzpatrick (3/23/2012 at 10:59 AM)
This is a great initiative, clearly providing evidence that sharing information between plans and provider reducse the adminstrative costs to both trading partners. I look forward to a follow-up once the central and northern California hospitals participate in POET.